Strong net sales growth and profitability improvement

July-September

• Order intake declined in business areas AirTech and Data Center Technologies (DCT), with a good development in business area FoodTech.
• Net sales increased +28% organically, mainly driven by a very strong growth in DCT and the battery sub-segment in AirTech. FoodTech had a strong development in the US, in both Climate and Digital solutions, offset by a weak development in EMEA and APAC.
• The adj. EBITA margin showed strong improvement mainly related to increased net sales in AirTech and DCT, net price increases, as well as efficiency improvements in all business areas.
• Earnings per share increased by +47% driven by the strong net sales and improved profitability.
• Cash flow from operating activities improved both compared to Q3 last year and Q2 this year mainly because of improved earnings and a reduction in operating working capital.

Events after the close of the period

• On 16 October the acquisition of the Indian manufacturer of air treatment solutions, ZECO was finalised.

CEO comments: 

Strong net sales growth and margin contributions from all business areas

As a summary of our achievements in the third quarter I would firstly like to highlight the strong net sales growth, driven by very good execution on large orders in Data Center Technologies as well as a good development in the battery sub-segment in AirTech. FoodTech had a very strong net sales development in the US driven both by Climate and Digital solutions, whereas APAC and EMEA continued to be weak. Secondly, I am happy to see that through good contributions from all business areas we reached our financial target for adjusted EBITA-margin of 14% in the quarter. Thirdly, through great efforts throughout the organization we generated strong operating cash flow reducing net debt to adjusted EBITDA to 2.2x.

We continued to expand our market presence through the acquisition of ZECO, an Indian manufacturer of air treatment solutions. ZECO constitutes an important step in developing our dehumidification business in India and positions us to grow with market leading products and complete solution sales. 

Stable long-term growth trends and good market activity

The underlying long-term growth drivers for our main markets are strong and we have seen continued good market activity in the quarter. In the short-term customers are placing orders closer to delivery, ie lead times are shortening, partly driven by the more unstable macroenvironment.

Market activity in Airtech’s end markets was good, but order intake lower than last year mainly as the order intake did not comprise of any larger orders in the quarter compared to last year when we received a larger order for a battery production facility of MUSD 65. In Asia, the development in China was weak mainly due to a continued consolidation of the battery market.

Data Center Technologies continued to see a very strong demand in North Americas, however, did not receive any large orders in the quarter. Last year in the same period two large orders were received with a combined value of MUSD 239. They had a good development in Europe, for example with an order for the product Oasis, that has enjoyed a good position in the US market since several years.

Order intake in FoodTech was positive with strong development in both Climate- and Digital solutions in the US. The strong growth journey in Digital solutions is continuing and our SaaS business grew above 50 per cent. A slight recovery of the markets in APAC and EMEA led to a stable order intake in these regions.  

Focus on customer success through sustainable solutions

Our adjusted EBITA grew more than 70% and the EBITA-margin improved compared to the third quarter last year in all business areas. The improvement is a result of the good volume increase, continued good pricing management, our continuous improvement initiatives as well as well-executed projects that led to high utilization of our production.

Operating cash flow was positive in the quarter mainly because of reduced working capital levels from solutions being delivered to customers in Data Center Technologies.

AirTech announced the first implementation of a virtually moisture- and carbon-free process air system in a production facility, in partnership with GreenCap solutions. The technology will improve the quality and lifetime of customers’ products, thereby making them more sustainable.

Our employees are the core of our business. In recent times with increasing geopolitical instability, we are now focusing even more on safety first for all our employees. I want to thank all employees for their hard work in making our journey a success.

Klas Forsström, President and CEO

Information about the webcast: 

You are welcome to join a webcast or telephone conference today at 9:00 AM CEST, when President and CEO Klas Forsström together with the Group Vice President and CFO, Katharina Fischer, will present the report.

Webcast

https://ir.financialhearings.com/munters-q3-report-2023

Conference call

If you wish to participate via teleconference, please register on the link below. After registration you will be provided phone numbers and a conference ID to access the conference. You can ask questions verbally via the teleconference.
https://conference.financialhearings.com/teleconference/?id=5009867

This interim report, presentation material and a link to the webcast will be available on https://www.munters.com/en/investor-relations/

Contact information:

Investors and analysts
Ann-Sofi Jönsson, Vice President, Investor Relations and Enterprise Risk Management
E-mail: ann-sofi.jonsson@munters.com, Phone: +46 (0)730 251 005

Media
Eva Carlsson, Director of External Communications
E-mail: eva.carlsson@munters.com, Phone: +46 (0)70 88 33 500

Every care has been taken in the translation of this interim report. In the event of discrepancies, the Swedish original will supersede the English translation. The addition of the totals presented may result in minor rounding differences.

This information is information that Munters Group AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 07.30 AM CEST on October 24, 2023.

About Munters
Munters is a global leader in energy-efficient air treatment and climate solutions. Using innovative technologies, Munters creates the perfect climate for customers in a wide range of industries. Munters has been defining the future of air treatment since 1955. Today, more than 4,000 employees carry out manufacturing and sales in more than 30 countries. Munters Group AB reported annual net sales of more than SEK 10 billion in 2022 and is listed on Nasdaq Stockholm. For more information, please visit www.munters.com.